Repossessions Bill ‘unpalatable but necessary’

Legislation to repair a gap in the law linked to house repossessions has been described as “unpalatable but necessary”.

Independent TD Stephen Donnelly said it was an “ugly truth” that there would be more repossessions over the next few years.

But “our current rate of repossessions is not sustainable given the climate we are in”. The Wicklow TD said the repossession of homes had to be reinstated in law but it should always be “a last port of call”.

Low rate of repossessions
He was speaking during the Dáil debate on the Land and Conveyancing Law Reform Bill, which reinstates aspects of old legislation, removed when the 2009 Land and Conveyancing Law Reform Act was passed.

House repossessions went into abeyance following a 2011 High Court judgment highlighting the gap in the law.

The new Bill reinstates the previous sections allowing for repossessions and Mr Donnelly said Ireland’s low rate of repossessions, even allowing for the gap in the law, “is something we should be proud of”. Repossession rates in Ireland are at 0.25 per cent compared to 3 per cent in Britain and up to 5 per cent in the US.

He recognised however that “if lenders cannot call on the security against a loan that they will do some bad things ultimately for citizens, as the price of loans would go through the roof”.

Mr Donnelly welcomed a section in the Bill which would give judges discretion to refer a borrower and lender to the personal insolvency arrangement process rather than go through with repossession. He did not believe banks should have been given a veto and he believed it could be abused in repossession cases.

Minister for Justice Alan Shatter who introduced the legislation, criticised Fianna Fáil for “political opportunism and hypocrisy” in opposing the reinstatement of a provisions law “they proposed, drafted and supported, during passage of the 2009 Act”.

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Fianna Fáil finance spokesman Michael McGrath said he recognised the legislation closed an unintended lacuna in the law but it would lead to a significant increase in repossessions of family homes and buy-to-let properties, perhaps tens of thousands. He acknowledged there were times “where people would be better off forfeiting the home”.

Clearing the balance
He warned banks would choose properties where most of the mortgage had been paid and the sale would clear the outstanding mortgage balance in full, rather than a property deep in negative equity.

Sinn Féin deputy leader Mary Lou McDonald said the Bill achieved a simple goal – to make it easier for banks to repossess homes.

“Fianna Fáil devised the plan, leaving Fine Gael and the Labour Party to implement it,” she said.